Redx Pharma PLC (LON:REDX) confirmed that, further to its announcement on February 28, it has entered into a £5mln short term loan agreement with one or more entities controlled by Redmile.
The AIM-listed drug discovery and development company focused on cancer and fibrosis said the principal terms of the loan are as follows:
- £5mln will be borrowed in full in a single drawdown
- The loan is secured by fixed and floating charges over all assets of the group and its subsidiaries, with the exception of the RXC006 and GI-Targeted ROCK research programmes
- Interest is payable at 10% per annum from the date of signing, and then from and including the date 3 months from signing, the interest rate will be 20% per annum, with all interest to be paid at the same time as the loan is repaid
- The loan (together with all unpaid interest) is repayable in full on 31 August 2020, but may become payable earlier in the event of default
- In the event of any sale of all, or substantially all, of the assets or more than 50% of the ordinary shares of the company, or a merger or similar reorganisation, the loan is repayable, without premium or penalty, together with any interest due
- Standard representations and warranties have been provided to Redmile upon signing the loan agreements
The company said it intends to draw down the loan immediately after the conditions are satisfied and the proceeds will serve to further extend the company's cash runway into the third quarter of 2020 and will be used to augment general working capital.
As Redmile holds 48.2% of the company's issued ordinary shares the loan constitutes a related party transaction for the purposes of Rule 13 of the AIM Rules.
The group said its board consider that the terms of the loan are fair and reasonable insofar as its shareholders are concerned, having consulted with Cantor Fitzgerald Europe, the company's nominated adviser.
Redx said it will make further announcements on funding as appropriate.